Taiwan has ambitious plans for 5G, a new mobile communication technology with faster speeds, greater capacity, and lower latency (transmission delays) than current network systems. Telecom industry watchers expect the official 5G standard to be announced in 2018, with full commercialization then likely to follow in 2019 or 2020. At that point, an estimated 100 million devices in Taiwan would be using 5G technology, processing data 100 times faster than 4G.
Analysts say Taiwan’s strengths in the integrated circuit (IC) and wireless local area network (WLAN) module industries make it well positioned to tap the new 5G market. “Our R&D capabilities in end-user devices and WLAN modules are most likely to help Taiwan gain market share in 5G, which requires convergence of different communications technologies,” says Jong Kuochin, an analyst at the state-backed Market Intelligence & Consulting Institute (MIC).
Taiwan is an ideal market in which to test 5G, says Jonathan Lai, head of the 5G Program Office under the Ministry of Economic Affairs (MOEA). “Taiwanese are early adopters of new technology and are avid users of the mobile Internet,” he says. Average data consumption per user in Taiwan has reached roughly 7 to 10 GB per month, well above the global average for 4G LTE networks, according to the Taiwan Association of Information and Communication Standards (TAICS).
To ensure that Taiwan can capitalize on 5G commercialization, the Executive Yuan in May approved a 5G development blueprint based on high-definition (HD) mobile entertainment, smart manufacturing, and mobile virtual reality (VR). The blueprint will “build close cooperation among industry, government, and academia,” Jong says.
Further, TAICS inked a partnership in March with the Next Generation Mobile Networks Alliance, which includes global telecom operators like Vodafone Group, T-Mobile USA, and China Mobile. The two parties have agreed to jointly promote 5G technologies once it becomes commercially available.
The government’s push to give Taiwan a role in 5G commercialization follows less successful efforts in earlier wireless technologies. Most notably, in 2007 the Chen Shui-bian administration made the fateful decision to support Intel’s WiMAX technology instead of the long-term evolution (LTE) option that eventually became the 4G standard. Betting on WiMAX cost Taiwan heavily, as it has trailed most advanced economies in the implementation of 4G and related telecom services. The lag has inconvenienced consumers and reduced business opportunities.
The government reportedly had hoped to upgrade Taiwan’s ICT industry by supporting an alliance between local manufacturers and Intel to develop the 4G standard. “The problem was that there was no back-up plan in the event that WiMAX did not prevail,” says a well-connected industry source who could speak only on the condition of anonymity. The source adds that Intel’s proposal looked attractive at the time, as the company promised to spend US$500 million from 2008 to 2013 purchasing WiMAX equipment from Taiwanese firms.
Bureaucratic paralysis later prevented the government from shifting gears and moving earlier to get behind LTE, says the source, noting that “there were definitely influential people inside the government who realized early on that that WiMAX was likely to fail, but nobody wanted to admit they had made a mistake.”
As a result, as the 5G era approaches, the government has changed its approach. Rather than backing any particular type of technology, it is focusing on where Taiwanese firms can contribute in the broader 5G field.
‘Critical minority role?’
During the 2016 Taipei 5G Summit held in March, TAICS chairman Jonathan Tsang told the audience: “We have to admit that Taiwan is an island with limited resources.” He said it would be “greedy” for Taiwan to expect to set the 5G technology standard, but that the island could still play a “critical minority role.” If Taiwan could have a 3-5% market share of the “intellectual property rights of crucial network systems,” it would be able to play a key role in the development of global 5G technology, he said.
MIC’s Jong also applies the “limited resources” description to the availability of TD-LTE spectrum in Taiwan. “Without enough TD-LTE bands, Taiwanese network communication suppliers are unable to do 5G trial runs and have no choice but to conduct trials elsewhere,” he says. “The lack of sufficient spectrum bands is likely to prevent Taiwan from becoming a major player in 5G.”
By contrast, Jong expects Korea and Japan to play driving roles in shaping the 5G landscape. He notes that both nations plan to commercialize 5G services during the respective Olympics they will host: Pyeongchang for the Winter Games in 2018 and Tokyo in 2020. “Korea and Japan have been moving aggressively in 5G commercialization,” he says. “Conducting trials of 5G services during the Olympic Games will give them a better chance of surpassing other countries in the 5G field,” he says.
In June, Korea Telecom and U.S.-based Verizon announced they would work together to develop 5G technologies and establish global standards. In a statement, the two companies said they would jointly develop new network technologies such as software-defined networking (SDN) and network function virtualization (NFV).
With SDN and NFV, telecom operators are able to focus on software and server-based infrastructure rather than traditional hardware-based network equipment.
Meanwhile, South Korean electronics giant Samsung is intent on becoming a leader in 5G, observes Lai of the 5G Program Office. In May a Samsung spokesperson said the company aims to sell 10 trillion won (US$8.6 billion) worth of 5G equipment annually by 2022. Like Korea Telecom, Samsung is partnering with Verizon to develop 5G technology. Verizon is hoping to deploy 5G trials on home broadband services in the U.S. by 2017.
Japan is making large strides of its own in 5G. In May the Japanese telecom giant NTT Docomo announced it had successfully transmitted 8K video in real time wirelessly. The company said time lags in the transmission were kept to 1/10,000th of a second, which is sufficient to broadcast sporting events and news in real time. KDDI, another large Japanese telecom operator, also conducted successful 8K tests, broadcasting the high-definition video over optical fiber. The Japanese government will begin trials of 8K broadcast this year and intends to have the technology ready for the 2020 Tokyo Olympics.
The News Lens has been authorized to repost this article. The piece was first published by Taiwan Business TOPICS.
(Taiwan Business TOPICS is published monthly by the American Chamber of Commerce in Taipei.)